Recent court documents reveal that a U.S. Representative from Florida and more than 100 other investors were cheated out of more than $35 million. Rep. Alan Grayson's losses make up over half of the total losses- about $18 million. William Dean Chapman, the man who ran the scheme, was sentenced by a federal judge last Friday to 12 years in prison. Chapman stole investors' hard-earned money and used it to fund a lavish lifestyle, full of expensive cars and a home valued at $3 million.
What Chapman was doing was taking stocks from his clients as collateral for loans. He allowed his investors to take out loans valued up to 90 percent of the stocks' value. When stocks didn't perform, Chapman agreed to let his investors walk away with the full value of the loan. When stocks did perform, Chapman promised his investors that he would return them in increased value if the investors repaid the load with interest.
An investigation revealed that instead of doing as he promised, Chapman took investors' stocks, sold them and kept the money for himself. He spent his investors' money, so he couldn't return their stocks at increased value if they performed well as he promised he would.
Sadly, this is not the first time Grayson has fallen victim to an investment fraud scheme. Just four years ago, Grayson won a lawsuit against Derivium Capital and received a judgment amounting to about $34 million. Derivium Capital's scheme was run almost the same exact way that Chapman ran his scheme. But because he began investing with Chapman before the Derivium scheme broke, there was no indication that either investment was a scam.